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November 14, 2013

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Home » Opinion » Chinese Views

Reforms benefit growing China as well as world economic stability

Source: Xinhua | November 14, 2013, Thursday | Print Edition

Since a massive economic transformation drive was launched in 1978, China has maintained economic growth for decades.

China’s GDP skyrocketed from 364.5 billion yuan (US$59.8 billion) in 1978 to 52 trillion yuan in 2012, with total trade volume rising to US$3.8 trillion from US$20.6 billion 35 years ago.

Meanwhile, China has become a big investor. In 2012, the country saw a record high of outward direct investment at US$87.8 billion, up 17.6 percent year-on-year, joining the ranks of the world’s top three investment source countries for the first time.

According to the National Statistics Bureau, China has topped the list of contributors to the global economy, with up to 19.2 percent of world economic growth coming from China in 2007, compared to 2.3 percent in 1978. In 2012, China’s economic growth again outpaced the global average, with its contribution to world economic growth looking to record a new high.

China’s deepening reforms, highlighted by a reform agenda issued at the end of the third plenum of the current CPC Central Committee (November 9-12), will unleash new growth drivers that benefit the rest of the world, analysts say.

“China’s growing overseas investment will first of all benefit those countries with close relations with Beijing,” said Andrey Ostrovsky, deputy director of the Russian Academy of Sciences’ Far East Institute.

Gerrishon Ikiara, an international relations professor at the University of Nairobi in Kenya, said China’s deepening reforms have had a significant influence on Africa. “Chinese enterprises have helped boost African economies with their technology and management experience, particularly in developing a green economy and realizing inclusive growth,” Ikiara said.

Egypt’s China expert Muhammad Abdel-Wahab Al-Sakit, a former Arab League ambassador to China, echoed the view, saying China’s “go global” strategy had produced mutual benefits in many countries.

Deep-water zone

China’s reform and opening up, after 35 years of notable achievements, has entered the deep-water zone where tough challenges must be tackled.

To keep up growth, China needs to take bold steps to adjust its economy, strengthen social welfare and cut red tape. A comprehensive plan to overhaul the economy is at the center of the four-day closed-door talks that ended on Tuesday.

Upgraded model

Some experts say the upgraded “China model,” after the transformation of government functions, will continue to play an important role in the Chinese and world economies.

Yakov Berger, an Chinese studies expert at Russia’s Far East Institute, said the greatness of the “China model” was effectively combining state regulation and market adjustment and keeping a dynamic balance between them. This model would continue to provide a guarantee for China’s development and inject dynamism into the world economy, Berger said.

In addition, China and the United States, two of the world’s big nations, are important trade partners with economic complementarity. The reform and development of China will bring America unexpected, important opportunities.

Former US Secretary of the Treasury Henry Paulson said the world economy would gain new opportunities with China’s implementation of measures such as promoting the market’s initiative function, increasing opportunities for small and medium-sized enterprises, upgrading efficiency in capital distribution and improving the balance between consumption and investment.

Douglas Paal, vice president for studies at the Carnegie Endowment for International Peace, told Xinhua at a forum Monday that the prospect for a reform agenda in the financial sector was greatest as reformers in financial circles “understand the needs China faces.”

“Freeing up interest rates, deepening financial markets, regulating the informal banking sector, and introducing competition, would all make sense as partial but important steps toward long-term capital account convertibility and banking efficiency,” Paal wrote in an article published on the think tank’s website.

“This may offer openings for foreign financial firms to participate more deeply in the Chinese economy,” he said.

The inclusive and comprehensive development of China has benefited both itself and the world. Only in such a win-win way can China realize sound development in the long term.

 

Chinese Views


 

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